Carta: Is This Startup Platform Using Confidential Customer Info To Facilitate Transactions?
Major friction has surfaced between startup platform Carta and some of its founders, revealing a breach of trust that threatens the platform’s standing in the startup community. The controversy unfolded when Karri Saarinen, a co-founder of Linear.app, publicly accused Carta of using insider details from customers to facilitate transactions without consent.
Carta is a startup that specializes in capitalization (or cap) table management and valuation software for other startups.
The dispute centers around Carta’s alleged outreach to founders’ angel investors and funds’ LPs, proposing share sales through the Carta Private Marketplace offering. This move sparked outrage, with Saarinen calling out Carta on social media and sharing a screenshot of the unsolicited email sent by the platform to one of Linear’s undisclosed shareholders.
Saarinen expressed his concerns, stating, “As a founder, it feels kind of crappy that Carta, who I trust to manage our cap table, is now doing cold outreach to our angel investors about selling Linear shares to their buyers.”
The Carta co-founder outlined specific details Carta has access to, raising concerns about the platform’s potential misuse of confidential information. Saarinen highlighted the intrusion into private matters, emphasizing that Carta’s actions could jeopardize the trust startups place in the platform.
Carta’s CEO, Henry Ward, responded to Saarinen’s accusations, expressing his dismay at the situation and assuring an internal investigation. Ward attributed the incident to an employee’s violation of internal procedures, stating, “I’m appalled that this happened.”
In a subsequent public exchange between Saarinen and Ward, the former continued to voice his disappointment, revealing that this might be indicative of a broader systematic issue within Carta. Saarinen cited instances where investors or employees of private companies were solicited by Carta employees for share sales without explicit approval.
Amidst the controversy, more similar stories came out, shedding light on what some describe as systemic practices by Carta. The discussion, criticizing Carta’s form documents for allowing individuals to bypass right of first refusal, leading to concerns about the platform’s integrity.
Notably, one founder, Casey Langwith, who canceled her Carta subscription, referenced prior exposés on sexual harassment and gender discrimination within the company, opting for an alternative platform, Pulley, which they claim offers a superior product experience at a lower price.
Information for this story was found via the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.